Dive Brief:
- Ascension has agreed to snap up a regional health system in a deal worth almost $1 billion as the Catholic nonprofit giant continues to beef up its portfolio.
- On Monday, Franklin, Tenn.-based Williamson Health announced it plans to sell to Ascension through the company’s Tennessee business Ascension Saint Thomas, after Williamson’s board voted unanimously in support of the change of ownership.
- The proposed transaction is still subject to approval by the Williamson County Board of Commissioners and other regulators. If the deal advances, the companies expect it to be finalized in 2027 or 2028.
Dive Insight:
Williamson’s decision to sell culminates a two-year strategic planning process after the system, which operates 30 locations, including its flagship hospital the Williamson Medical Center, determined it wouldn’t be able to survive the regulatory changes, workforce shortages and increasing expenses facing hospitals without more cash.
Last fall, Williamson distributed requests for deal proposals to 28 local, regional and national healthcare organizations. The system whittled down interested parties until it had three companies interested in a deal: Ascension Saint Thomas, for-profit hospital operator HCA Healthcare and Optum, the health services division of healthcare behemoth UnitedHealth.
The Optum offer represented a 10-year partnership agreement instead of an outright sale. Williamson’s board gave it careful consideration, given it was an opportunity for the system to remain independent — the preference of the board.
But “in addition to the evaluation of the Board’s foundational goals and objectives for a potential sale, the Board felt a unanimous and overwhelming sense of confidence and connection with Ascension Saint Thomas,” Bo Butler, the chairman of Williamson’s board, said in a statement.
“Sometimes the most important considerations during monumental decisions like this are the intangible instincts that emerge during the process,” Butler added, citing Ascension’s “cultural fit,” “like-minded community-focused mission,” “commitment to our employees” and “plans to quickly invest capital.”
The proposed transaction has an economic value of nearly $1 billion, including a $700 million purchase price along with capital investments, upgrades to Williamson’s electronic health record and service expansions, a spokesperson said.
Williamson and Ascension plan to draft a nonbinding letter of intent to merge over the next several weeks, which the companies will present to the County Commission for review.
Williamson said it will continue to operate independently as the deal progresses.
Williamson began exploring its future in the spring of 2024, after financial projections showed the system needed $150 million in capital improvements over the next five years. Williamson’s status as an independent nonprofit made it tricky for the system to access additional funding — funding that would be needed to prevent Williamson, which is currently financially stable, from absorbing future losses amid mounting pressures on hospitals, executives said.
Ascension has also been overhauling its business to stave off the same challenges after years of financial losses. In particular, the nonprofit giant, which owns 90 hospitals, affiliates with another 29 and operates dozens of other care sites across 16 states and Washington, D.C., has been reorienting its hospital-heavy portfolio more towards outpatient care.
Ascension has divested dozens of hospitals and various senior care assets in recent years, including in New York, Illinois and Michigan. At the same time, the company has acquired assets it argues will help diversify its portfolio and provide more stable income, including ambulatory surgery provider AmSurg in a deal closed last month.
